Game Theory 101: Bargaining

by William Spaniel

Tomorrow, you will go to your boss and ask for a raise. You need at least $20 per hour to stay; your boss is unwilling to pay you any more than $50. You should reach an agreement--but will the wage be closer to $20 or $50?This is the essence of bargaining. Using the same crystal clear logic of the Game Theory 101 series, William Spaniel explains the sources of "bargaining power"--the strength that allows you to successfully demand wages closer to $50. In doing so, he uncovers the bargaining in everything, including car negotiations, Breaking Bad, Deal or No Deal, McDonald's Monopoly, sports free agency, cable companies, security deposits, war, diamond manufacturing, labor unions, government shutdowns, nuclear showdowns, price fixing, unemployment benefits, legal battles, and police pullovers. With bargaining so pervasive, this is one book you can't afford not to have.

Genres: Nonfiction

221 pages, Kindle Edition

First published August 17, 2014

Reviews

[Joris Gillet · Rating 4 out of 5]

Am a big fan of William Spaniel's Youtube lectures on Game Theory. I teach Game Theory myself and often assign these videos or use them as inspiration for my own lectures. This short book is a very nice overview of the theory of bargaining from a game theoretic perspective. Starting at the ultimatum game and slowly but steadily working it's way to a version of Rubinstein's infinite round alternate offer model. Spaniel's approach is technical - there is maths and equations etc. - but it is by and large arguments-by-example (and not arguments-by-mathematical-proof) and I like that a lot. That's how my brain approaches these things and it's how I like to cover this material in class because I think it works for my students. The content is largely the same as the Youtube lecture series. Most of the extra material is applications and examples. These are clear and appropriate and do some nice colouring in but they are often a bit too America-focussed for me (sports teams, cable contracts, an anecdote about being stopped by the police where I am obviously missing some cultural context because I don't really understand the pay-offs). And it only costs a couple of bucks on Kindle.

[Omar Ebrahim · Rating 5 out of 5]

One of the best books I have read on bargaining if not the best. The author also has a YouTube playlist on the subject making the experience even better!